Banking culture creates the crooks: study

A cesspool of fraud and lies in the banking industry has come to light since the financial crisis of 2008, raising questions about how such rogue behaviour could have happened.
What caused traders, asset managers and others in the money business to behave dishonestly?
And how can dodgy behaviour be curbed?
Scientists at the University of Zurich in Switzerland conducted an unusual psychology experiment to find out.
Their results provide the first objective data for anecdotal evidence that the risk of fraud is rooted in a bank's culture -- and changing it may be painful.
"Our results suggest that the social norms in the banking sector tend to be more lenient towards dishonest behaviour and thus contribute to the reputational loss in the industry," said Michel Marechal, a professor of experimental economic research.

In research reported in the journal Nature today, the team recruited 128 employees from a large international bank and 80 from other banks.

On average, the employees had 11 and a half years' banking experience.
About half worked in core businesses like share trading, private banking or asset management, and the rest in support units such as human resources.
The scientists prepared an intriguing barometer of honesty.
In their trial, each volunteer was asked to flip a coin 10 times and report the outcome online.
If it concurred with a pre-programmed choice of head or tails, there was a reward each time of $20 (16 euros).

But before each toss, the banker was tipped off about what the outcome would be. Whether he or she chose to report it faithfully was the test.
In a move meant to mimic the competitive nature of the banking profession, the trialists were also told they could only collect their winnings if they outperformed another, randomly-chosen participant.